If a retail store has a current ratio of 2.5 and working capital of $117,000.What are the total of the current assets?
A)$46,800
B)$117,000
C)$195,000
D)$292,500

Question

Quizplus · Accepted Answer

Current Ratio = Current Assets / Current Liabilities

We can rearrange this formula to find the total of the current assets:

Current Assets = Current Ratio x Current Liabilities

We are given the current ratio is 2.5 and working capital is $117,000. We can use the working capital as our current liabilities since it is the excess of current assets over current liabilities.

Current Assets = 2.5 x $117,000
Current Assets = $292,500

Therefore, the total current assets are $292,500. The correct answer is C.

If a Retail Store Has a Current Ratio of 2